Chapter 05_Efficiency and equity

Chapter 05_Efficiency and equity - EFFICIENCY AND EQUITY...

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EFFICIENCY AND EQUITY 5 CHAPTER
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Value, Price, and Consumer Surplus Part (a): demand curve tells us the quantity that consumers plan to buy at a given price.
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Value, Price, and Consumer Surplus Part (b): demand curve tells us the maximum price that consumers are willing to pay for a given quantity. This price measures the marginal benefit of the good at that given quantity.
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Value, Price, and Consumer Surplus Consumer surplus: Value of a good minus the price paid for it, summed over the quantity bought. It is measured by the area under the demand curve and above the price paid, up to the quantity bought.
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Value, Price, and Consumer Surplus Consumer Surplus.
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Cost, Price, and Producer Surplus Part (a): supply curve tells us the quantity that producers plan to sell at a given price.
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Cost, Price, and Producer Surplus Part (b): supply curve tells us the minimum price that producers are willing to accept for a given quantity.
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Cost, Price, and Producer Surplus Producer surplus: Price of a good minus the
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This note was uploaded on 10/10/2010 for the course ECON 2100 B taught by Professor Dr.vivekghosal during the Fall '09 term at Georgia Institute of Technology.

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Chapter 05_Efficiency and equity - EFFICIENCY AND EQUITY...

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